March 10, 2013
A classic article on the origins of business strategy, Henderson compares competition in the ecosphere (i.e., “natural competition”) with that in the trade and commerce (i.e., “strategic competition”). Some interesting observations:
The Nature of Competition in Ecology:
Gause’s Principle of Competitive Exclusion in Biology: “no two species can coexist that make their living in the identical way.”
The Nature of Competition in Business:
Gause’s Principle applied in the business environment: each business within an industry must be different enough to have a unique advantage in order to survive.
What’s common between the ecosphere and business competition:
Random chance is probably the major, all pervasive factor in both the natural and business environments.
What’s difference between the 2?
A business strategist can use imagination and logic to accelerate the effects of competition and the rate of change.
Why Advertising is key:
A customer’s perception (i.e., image) of a business’ product and/or service is often the “only basis of comparison between similar but different alternatives” which helps to explain why advertising is extremely vital.
What is the essence of Business Strategy?
Henderson points out that there are “many possibilities for each competitor to enlarge the scope of its advantage by changing what differentiates it from its rivals.” Can “evolution be planned for in business?” Yes, that is what strategy is for – i.e., “strategy is a deliberate search for a plan of action that will develop a business’ competitive advantage and compound it.”